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ASIC continues crack down on deceptive advertising

The corporate regulator has issued stop orders against a commercial property investment firm for misrepresenting the performance risks of one of its funds, including marketing it as 'Covid proof'.

An interim stop order was placed on Fawkner Property Ltd (Fawkner) to prevent the fund issuing or transferring interests in its Private Property Trust No. 20 (marketed as Essential Services Trust No. 20).

Under the 21-day order, Fawkner cannot offer, issue, sell or transfer interests in the fund based on its existing product disclosure statements (PDS).

According to ASIC, Fawkner misrepresented the performance risks of the fund in its marketing in several instances, including by failing to adequately explain how forecasted returns were calculated and  by not providing adequate warnings that the forecasted performance may not be achieved.

ASIC said Fawkner also used the term 'Covid-proof', inappropriately compared the fund to lower risk investments, benchmarks, and indices; and used outdated performance numbers.

It added that further regulatory action in relation to the Fund and Fawkner may be considered.

The regulator has issued several stop orders recently for varying reasons.

Recently it issued stop orders against Responsible Entity Services Limited (RES) for misleading or deceptive representations in advertising and further stop orders for breaches of the design and distribution obligations.

The initial order, handed down in late July, prevents RES from advertising or publishing any statement regarding PPM Units that suggests an investor will acquire equity in Pleasure Point Mine Pty Ltd (PPMPL), a related entity of RES.

The second order was the first time ASIC had issued a stop order under the DDO rules and prohibited RES from issuing interests in a class of interests in its RES Investment Fund as a result of deficiencies with its target market determinations.

Read more: ASICFawkner Property LtdResponsible Entity Services Limited